Latest news with #stockvaluation
Globe and Mail
5 days ago
- Business
- Globe and Mail
Palantir Just Hit a Record High. What's the Smart Move Now?
Key Points The tech company's revenue growth rate accelerated in Q1. Palantir's commercial business in the U.S. is seeing explosive growth. The stock's wild valuation leaves no room for error. 10 stocks we like better than Palantir Technologies › Data and artificial intelligence company Palantir (NASDAQ: PLTR) seemed to defy gravity in 2024. Shares more than quadrupled, rising a staggering 340%. With such an incredible rise, you'd be forgiven for guessing that the stock would cool off in 2025. But, so far, the opposite is true. Shares are heating up, rising by more than 105% year to date as of this writing. This has given the tech stock a gain of approximately 800% since the start of 2024. With shares trading at record highs. What should investors do? Does it make sense to buy more shares and hope the momentum continues? Or should investors take a more cautious approach and hold or even sell the stock? Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Soaring sales One thing Palantir really has going for it is its top-line growth. The tech company posted first-quarter revenue of $884 million, up 39% year over year. Highlighting the company's momentum, this was an acceleration from 36% year-over-year growth in the previous quarter. Fueling Palantir's first quarter of 2025 was 55% year-over-year growth in U.S. revenue. Accounting for $628 million of the quarter's total revenue, the U.S. market is vital for Palantir. Supporting this market was a 71% year-over-year increase in commercial revenue and a 45% jump in government revenue. Zooming out to all of the company's markets, Palantir said in its first-quarter update that it closed 139 deals worth $1 million or greater, 51 deals worth at least $5 million, and 31 deals worth $10 million or more. With these strong results now behind it, management had the confidence to raise full-year revenue guidance. The company said it now expects 2025 revenue to be between $3.890 billion and $3.902 billion. This compares to revenue of about $2.9 billion in 2024. The midpoint of management's 2025 revenue guidance range, therefore, assumes about 36% growth. This impressive top-line growth is bolstering profits. Palantir's first-quarter net income was approximately $214 million, more than double its profit of about $106 million in the year-ago quarter. Comments from Palantir co-founder and CEO Alexander Karp in the company's first-quarter earnings call suggest he believes the company is still in its early innings. "We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S..." Karp noted. "We are delivering the operating system for the modern enterprise in the era of AI." A valuation problem While Palantir's top-line momentum is certainly impressive, there's one big problem for investors: The market seems to have already priced in more rapid growth for years to come. Today, Palantir's market capitalization sits at about $365 billion -- more than 93 times the high end of management's guidance range for full-year 2025 revenue. Using the company's trailing-12-month sales, Palantir currently has a price-to-sales ratio of 123. This would be a high figure even for a price-to- earnings ratio. And what is Palantir's price-to-earnings ratio? It's 672. Yes, you heard that right. It's safe to say that investors have already bid up the stock to a level that prices in the most optimistic assumptions for this company. So, what should investors do? The decision is a personal one -- one that you'll have to make on your own. However, if I owned the stock, I'd sell. And for those who don't own shares, I'd avoid them like the plague at this price. Of course, I could be wrong. It's always possible that Palantir exceeds even my most bullish assumptions. Still, I believe there are likely better places with less risk and greater upside potential for investors to allocate their capital. Palantir is a great company. But expectations are simply too high. Investors would be wise to wait to see if they can buy shares at a better entry price. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Yahoo
5 days ago
- Business
- Yahoo
Palantir Just Hit a Record High. What's the Smart Move Now?
Key Points The tech company's revenue growth rate accelerated in Q1. Palantir's commercial business in the U.S. is seeing explosive growth. The stock's wild valuation leaves no room for error. 10 stocks we like better than Palantir Technologies › Data and artificial intelligence company Palantir (NASDAQ: PLTR) seemed to defy gravity in 2024. Shares more than quadrupled, rising a staggering 340%. With such an incredible rise, you'd be forgiven for guessing that the stock would cool off in 2025. But, so far, the opposite is true. Shares are heating up, rising by more than 105% year to date as of this writing. This has given the tech stock a gain of approximately 800% since the start of 2024. With shares trading at record highs. What should investors do? Does it make sense to buy more shares and hope the momentum continues? Or should investors take a more cautious approach and hold or even sell the stock? Soaring sales One thing Palantir really has going for it is its top-line growth. The tech company posted first-quarter revenue of $884 million, up 39% year over year. Highlighting the company's momentum, this was an acceleration from 36% year-over-year growth in the previous quarter. Fueling Palantir's first quarter of 2025 was 55% year-over-year growth in U.S. revenue. Accounting for $628 million of the quarter's total revenue, the U.S. market is vital for Palantir. Supporting this market was a 71% year-over-year increase in commercial revenue and a 45% jump in government revenue. Zooming out to all of the company's markets, Palantir said in its first-quarter update that it closed 139 deals worth $1 million or greater, 51 deals worth at least $5 million, and 31 deals worth $10 million or more. With these strong results now behind it, management had the confidence to raise full-year revenue guidance. The company said it now expects 2025 revenue to be between $3.890 billion and $3.902 billion. This compares to revenue of about $2.9 billion in 2024. The midpoint of management's 2025 revenue guidance range, therefore, assumes about 36% growth. This impressive top-line growth is bolstering profits. Palantir's first-quarter net income was approximately $214 million, more than double its profit of about $106 million in the year-ago quarter. Comments from Palantir co-founder and CEO Alexander Karp in the company's first-quarter earnings call suggest he believes the company is still in its early innings."We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S..." Karp noted. "We are delivering the operating system for the modern enterprise in the era of AI." A valuation problem While Palantir's top-line momentum is certainly impressive, there's one big problem for investors: The market seems to have already priced in more rapid growth for years to come. Today, Palantir's market capitalization sits at about $365 billion -- more than 93 times the high end of management's guidance range for full-year 2025 revenue. Using the company's trailing-12-month sales, Palantir currently has a price-to-sales ratio of 123. This would be a high figure even for a price-to-earnings ratio. And what is Palantir's price-to-earnings ratio? It's 672. Yes, you heard that right. It's safe to say that investors have already bid up the stock to a level that prices in the most optimistic assumptions for this company. So, what should investors do? The decision is a personal one -- one that you'll have to make on your own. However, if I owned the stock, I'd sell. And for those who don't own shares, I'd avoid them like the plague at this price. Of course, I could be wrong. It's always possible that Palantir exceeds even my most bullish assumptions. Still, I believe there are likely better places with less risk and greater upside potential for investors to allocate their capital. Palantir is a great company. But expectations are simply too high. Investors would be wise to wait to see if they can buy shares at a better entry price. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy. Palantir Just Hit a Record High. What's the Smart Move Now? was originally published by The Motley Fool
Yahoo
16-07-2025
- Business
- Yahoo
Jim Cramer Says PepsiCo is Too Cheap Yet Overlooked
PepsiCo, Inc. (NASDAQ:PEP) is one of the stocks that Jim Cramer shared insights on. Cramer discussed the stock's valuation during the episode, as he said: 'If you want to know a stock that's too cheap relative to its growth rate, but nobody talks about it anymore, why don't you check out the stock of PepsiCo? It trades at a stunningly low 17 times earnings. I mean, what gives? Well, how about GLP-1 drugs? How about RFK Junior at Health and Human Services, who despises junk food even as he seems to embrace junk science? How about the desire to stay healthy? All these have weighed on PepsiCo stock. Of course, don't forget they own Frito-Lay. Maybe it's finally overdone. I don't know it. It's a tough industry all of a sudden.' A close up of a glass of a refreshing carbonated beverage illustrating the company's different beverages. PepsiCo (NASDAQ:PEP) produces and sells a wide range of beverages and packaged foods, including snacks, cereals, dairy products, and soft drinks. The company's portfolio features well-known brands like Lay's, Gatorade, Quaker, and Pepsi. While we acknowledge the potential of PEP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
06-07-2025
- Business
- Yahoo
An Intrinsic Calculation For Insight Enterprises, Inc. (NASDAQ:NSIT) Suggests It's 27% Undervalued
The projected fair value for Insight Enterprises is US$198 based on 2 Stage Free Cash Flow to Equity Insight Enterprises is estimated to be 27% undervalued based on current share price of US$144 Our fair value estimate is 18% higher than Insight Enterprises' analyst price target of US$169 How far off is Insight Enterprises, Inc. (NASDAQ:NSIT) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF ($, Millions) US$282.9m US$383.0m US$379.0m US$379.6m US$383.4m US$389.4m US$397.2m US$406.2m US$416.2m US$427.1m Growth Rate Estimate Source Analyst x3 Analyst x1 Est @ -1.04% Est @ 0.16% Est @ 0.99% Est @ 1.58% Est @ 1.99% Est @ 2.27% Est @ 2.47% Est @ 2.61% Present Value ($, Millions) Discounted @ 8.3% US$261 US$327 US$299 US$276 US$258 US$242 US$228 US$215 US$203 US$193 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$2.5b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 8.3%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = US$427m× (1 + 2.9%) ÷ (8.3%– 2.9%) = US$8.2b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$8.2b÷ ( 1 + 8.3%)10= US$3.7b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$6.2b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of US$144, the company appears a touch undervalued at a 27% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Insight Enterprises as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.3%, which is based on a levered beta of 1.233. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Insight Enterprises Strength Debt is well covered by earnings and cashflows. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow faster than the American market. Good value based on P/E ratio and estimated fair value. Threat Annual revenue is forecast to grow slower than the American market. Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. What is the reason for the share price sitting below the intrinsic value? For Insight Enterprises, we've compiled three relevant items you should further research: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Insight Enterprises , and understanding them should be part of your investment process. Future Earnings: How does NSIT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. — Investing narratives with Fair Values Suncorp's Next Chapter: Insurance-Only and Ready to Grow By Robbo – Community Contributor Fair Value Estimated: A$22.83 · 0.1% Overvalued Thyssenkrupp Nucera Will Achieve Double-Digit Profits by 2030 Boosted by Hydrogen Growth By Chris1 – Community Contributor Fair Value Estimated: €14.40 · 0.3% Overvalued Tesla's Nvidia Moment – The AI & Robotics Inflection Point By BlackGoat – Community Contributor Fair Value Estimated: $359.72 · 0.1% Overvalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-07-2025
- Business
- Yahoo
Calculating The Fair Value Of Tasmea Limited (ASX:TEA)
Using the 2 Stage Free Cash Flow to Equity, Tasmea fair value estimate is AU$3.55 With AU$3.51 share price, Tasmea appears to be trading close to its estimated fair value Analyst price target for TEA is AU$4.40, which is 24% above our fair value estimate How far off is Tasmea Limited (ASX:TEA) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (A$, Millions) AU$64.5m AU$73.6m AU$53.0m AU$50.1m AU$48.7m AU$48.1m AU$48.1m AU$48.6m AU$49.3m AU$50.3m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x1 Est @ -5.43% Est @ -2.92% Est @ -1.16% Est @ 0.07% Est @ 0.94% Est @ 1.54% Est @ 1.96% Present Value (A$, Millions) Discounted @ 7.9% AU$59.8 AU$63.3 AU$42.2 AU$37.0 AU$33.3 AU$30.5 AU$28.3 AU$26.5 AU$24.9 AU$23.6 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$369m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.9%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$50m× (1 + 2.9%) ÷ (7.9%– 2.9%) = AU$1.1b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$1.1b÷ ( 1 + 7.9%)10= AU$493m The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is AU$863m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of AU$3.5, the company appears about fair value at a 1.1% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Tasmea as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.9%, which is based on a levered beta of 1.136. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Tasmea Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings and cashflows. Weakness Dividend is low compared to the top 25% of dividend payers in the Construction market. Opportunity Annual earnings are forecast to grow faster than the Australian market. Current share price is below our estimate of fair value. Threat Dividends are not covered by cash flow. Revenue is forecast to grow slower than 20% per year. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Tasmea, there are three relevant factors you should further examine: Risks: For instance, we've identified 2 warning signs for Tasmea that you should be aware of. Future Earnings: How does TEA's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here. — Investing narratives with Fair Values Suncorp's Next Chapter: Insurance-Only and Ready to Grow By Robbo – Community Contributor Fair Value Estimated: A$22.83 · 0.1% Overvalued Thyssenkrupp Nucera Will Achieve Double-Digit Profits by 2030 Boosted by Hydrogen Growth By Chris1 – Community Contributor Fair Value Estimated: €14.40 · 0.3% Overvalued Tesla's Nvidia Moment – The AI & Robotics Inflection Point By BlackGoat – Community Contributor Fair Value Estimated: $359.72 · 0.1% Overvalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
